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TDS Rate on Payments of Commission or brokerage under section 194H of Income Tax Act

TDS Rate of 10% will be applicable on payment of commission or brokerage by person other than Individual and HUF to any other person, and then they have to deduct TDS at the rate of 10% but commission or brokerage for financial year should be greater than Rs 5000/-(exceed five thousand rupees). So Not TDS on commission or brokerage is payment for financial year is less than Rs 5000/-

TDS by Individual or HUF if their Turnover/ Gross receipt exceed Rs 1 cr for business and Rs.15 Lakhs for professional or such limit as given under section 44AB then such individual has to deduct the TDS on payment made for commission and brokerage.

Year

Audit Limits for Business

Audit Limits for Professional

2009-10 and Earlier

Rs 40 Lakhs

Rs 10 Lakhs

2010 to 2012 (2 Years)

Rs 60 Lakhs

Rs 15 Lakhs

2012 and onwards

Rs 100 Lakhs .i.e Rs 1 Crore

Rs 25 Lakhs

Meaning of commission or brokerage” includes any payment received or receivable, directly or indirectly, by a person acting on behalf of another person for services rendered (not being professional services) or for any services in the course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing, not being securities;

Reference: Section 194H of the Income Tax Act, 1961

Commission or brokerage

194H. Any person, not being an individual or a Hindu undivided family, who is responsible for paying, on or after the 1st day of June, 2001, to a resident, any income by way of commission (not being insurance commission referred to in section 194D or brokerage, shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of ten per cent :

Provided that no deduction shall be made under this section in a case where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year to the account of, or to, the payee, does not exceed five thousand rupees :

Provided further that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such commission or brokerage is credited or paid, shall be liable to deduct income-tax under this section:]

Provided also that no deduction shall be made under this section on any commission or brokerage payable by Bharat Sanchar Nigam Limited or Mahanagar Telephone Nigam Limited to their public call office franchisees.

Explanation.—For the purposes of this section,—

(i)  “commission or brokerage” includes any payment received or receivable, directly or indirectly, by a person acting on behalf of another person for services rendered (not being professional services) or for any services in the course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing, not being securities;

(ii)  the expression “professional services” means services rendered by a person in the course of carrying on a legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or such other profession as is notified by the Board for the purposes of section 44AA;

(iii)  the expression “securities” shall have the meaning assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);

(iv)  where any income is credited to any account, whether called “Suspense account” or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.

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